Despite union vote, Onex still buying Boeing Wichita

David Twiddy, The Associated Press

Published 10:00 pm, Thursday, May 26, 2005

KANSAS CITY, Mo. -- The proposed buyer of The Boeing Co.'s commercial aircraft division in Wichita, Kan., said yesterday it is not backing out of the deal after losing a key contract vote with the plant's largest union.

In a statement, Onex Corp.'s managing director, Nigel Wright, said he expects Onex will complete its acquisition of Boeing's operations in Wichita and in Tulsa and McAlester, Okla., by mid-June.

"Onex is firmly committed to this business," Wright said. "The new company represents the only real option for new investment, new work, new jobs for those who choose to come with us, and greater job security for these communities and the families in them."

Members of the Machinists union, which represents 5,300 of the plant's 7,200 workers, voted down a contract proposal from Onex on Tuesday. Onex had said it would walk away from the purchase if that contract failed.

Union members were critical of the contract, which called for a 10 percent pay cut and higher health insurance costs.

In an interview, Wright said Onex will send job offer letters to the union members, offering the same salary and benefits as in the contract. However, he said the members would not be offered an equity stake in the business, as proposed in the original contract, and won't be eligible for a Machinist union-backed pension plan.

"What we're going to do is offer appointment letters to people and then hope that they accept them," he said, adding that the company will not send letters to the nearly 800 workers who were not being rehired under the original contract.

Wright said Onex would continue negotiating with the other unions that represent workers at the plants and would extend job offers to those employees during the next three weeks.

Onex agreed earlier this year to buy the three plants for $900 million in cash and the assumption of $300 million in debt. The sale is part of Boeing's strategy to focus its commercial aircraft business on design and final assembly.

Gary Chaison, professor of labor relations at Clark University in Massachusetts, told The Wichita Eagle that Onex was more likely to stick with the sale because the contract was not overwhelmingly turned down.

Had it been a major rejection, he said, "I think then they would have said, 'That's it. We're not going to get anywhere here.' "

Some Machinists union members who voted against the contract Tuesday said there was just too much not to like in the offer.

But Chaison said because of the close vote, he thinks Onex will be able to sweeten the deal a bit to show union members it's listening to them.

Boeing spokesman Chuck Cadena said the company was "very pleased" with Onex's decision and would continue the process of closing the sale.

"We believe transferring ownership to Onex is in the best interest of the employees," Cadena said.

Members of the United Aerospace Workers at Boeing's Tulsa and McAlester plants were to vote yesterday on an offer from Onex. But that was rescheduled until after Memorial Day, said Steve Hendrickson, a spokesman for the Tulsa plant.

While some workers expressed anger Tuesday at Boeing, Onex and their union, Chaison said the union was in a difficult position.

He said the union "is doing the best that they can."

"It's not the most ideal circumstances -- even the most powerful unions in the country had to agree to concessions at one time or another," Chaison said.